>> the president showed an olive branch in his talk so you leave thinking maybe there's a plan c and maybe something that can kick the can and show that not everything is dysfunctional and that's one of the main reasons why we did not sell off. we keep believing that can happen. i tell you what, i'm not going to dismiss that. i also want to leave open the possibility that we fall off the cliff and we go into a trampoline or a deep pool and then we come back and that is still more likely despite the peace overture i thought i heard the president make tonight. "mad money." i'm jim cramer. i'll see you monday! good evening, everyone, i'm larry kudlow, and welcome to the "kudlow report." president obama calls for compromise. he has an urgent plea to extend the tax cuts in the next ten days. he's basically calling for a stopgap bill that will avoid tax hikes on 98% of americans. he's willing to waiten o the rest.

meanwhile, stocks had a fiscal cliff selloff. but even a deal in january for the cliff is going to be all right if you ask me. and today's economic numbers pretty darn good. and the gun control debate heats up again today after a controversial nra news conference in washington. the "kudlow report" begins right now. all right. let's first look at the market reaction to this fiscal cliff stuff. jackie joins us with the details. good evening, jackie. >> good evening to you, larry. while markets finished lower on the day, they were higher on the week. the dow up about .5%, the nasdaq higher by 1.7%, and the s&p 500 up by roughly 1.2% over the last five days. meantime in terms of sector performance, the financials, they had a rough day. the plan "b" proposal for the

fiscal cliff. up more than 3% for the week. also technology and materials they finished lower on the day, as well, but higher for the week. the worst-performing sectors this week, consumer staples, telco, and health care, and in terms of the individual stocks that we were watching on the s&p 500 nyse was bigger with a 30% upside after news of that $8.2 billion deal to be acquired by the intercontinental exchange. to the downside, it was electronic arts logging a loss on concerns there will be more scrutiny on violent video games in the coming days and weeks after that tragedy at sandy hook, elementary school. >> many thanks, appreciate it. here now to talk to us dan greenhaus, you are, if i understand it, a fiscal cliff stock bear. >> yes. give or take, yes. >> and why? >> well, i think it's pretty clear you're talking about -- well, our best case scenario has been we're going off the cliff. we said that the day after the

election, we standby it today. if you do that, you're talking about the largest tax increase in our country's history, a considerable amount of spending cuts, and in the short-term, probably hit the stock prices on the order of 10%. >> if i give you a cliff deal. okay. i'm going to give you a cliff deal for middle class extensions, 250,000, you're right the top rates will go up. but if you get that deal in january, that does save us from the recession scenario, the really deep gloom scenario. >> this is the big debate. our view has been if you get a deal fairly quickly in the new year, it's hardly the end of the world. the question really or the debate really accelerates if you start getting closer to january 15th or ultimately the inauguration. do you do more serious damage to the economy that makes it more difficult to recover? >> they can withhold changing the withholding rates. i know that. >> sure. listen, the president and the treasury secretary has enormous leeway on january 15th, which presumably is everybody's first payday of the new year, they will see the payroll tax reduction gone, they may not see

the withholding -- >> that's a good point. >> which, by the way, is $120 billion, that's not nothing. but, again, the president has leeway here, but on the other side of the equation is the confidence side of the thing. you're starting to see consumer confidence decline. we've seen small business, the nfib, the small business surveys decline and ceo confidence beginning to turn down. that may not reverse quite quickly. >> can i raise, though, so interested in today's numbers, very strong, surprisingly strong numbers on personal income and spending, consumer spending. and for the second month in a row, surprisingly strong numbers on capital goods investment, surprisingly strong. is something going on there? is the economy better than we think? >> yeah, the funny thing is if you read the headlines, you'd think we were in the middle of a recession. but quite frankly the economy is not going gang busters by any means, but it is growing, and even with the fiscal austerity baked in the cake, you're talking about a 2% growth rate and housing is an important component with that. you're talking about durable

goods today, there's a core measure of business spending which has begun to pull out of a tail spin. >> yeah. >> there's a little bit here. and ben bernanke's last speech was interesting. he ended his last speech at the economic club of new york, i believe, by saying if we could just get past what is ultimately a stupid debate. >> right. >> there's some momentum here. and quite frankly for a lot of us in the market, we'd like to move past this. >> do you expect, however, while we fight for this fiscal cliff baloney, do you expect the market selloff? >> sure. >> today notwithstanding, but it finished well off the lows today. >> as jackie talked about, it's up for the week. for the month. i think there's still a modest positive gain. what's interesting in this debate is the two previous times we've increased capital gains, nixon in 1970 and reagan, of course, with the tax reform act of '86. the december preceding the adjustment, the stock market was down. december 1969, december 1986. i don't think people have believed they wouldn't get a deal.

when we talked about we're going over the cliff after the election, i think we were the only ones in some level, at least prominence in the ability of coming on your show. we were the only ones saying that could happen. >> capital gains going up, but we don't know how much. we don't know how much dividends could go up a lot. if you're taxing capital and raising the cost of capital and lowering the return on capital, that is anti-growth. so i totally agree with you on that point. >> on that front, warren buffett had his prominent "new york times" op-ed saying if an investment's attractive, and the page, a lot of people take issue with the "wall street journal" op-ed page and they said something clearly. you need to look at things on an after-tax basis. >> of course you do. i mean, that's -- >> warren buffett was being too glib by ten. we've got more to do. now, here's what president obama had to say just before leaving for hawaii for christmas.

>> i just spoke to speaker boehner, and i also met with senator reid. in the next few days i've asked leaders of congress to work towards a package that prevents a tax hike on middle class americans, protects unemployment insurance for 2 million americans, and lays the groundwork for further work on both growth and deficit reduction. that's an achievable goal. that can get done in ten days. >> wow. ten days. so, will the fiscal cliff solve in ten days? i know there's a deal out there some place it may not be until january, but let's ask our free market friday panel what they think. we have the columnist for the hill and former dnc communications director katie pavlitz. and mr. greenhaus is going to stay with us. all right, katie. first of all, obama basically said in ten days we can get a deal, it sounds like a small deal, 250,000 is the middle

class threshold after mr. boehner's plan "b" got defeated. is such a thing possible? or will we have to wait until the new year? >> we're probably going to have to wait until the new year, unless, of course, president obama comes back with this new plan -- the original plan that he had, which as you mentioned the $250,000 threshold. the fact is that boehner and obama's proposals really aren't that far apart right now. president obama wants $1 trillion in new taxes, john boehner has said he's willing to give $1 trillion. obama said he wants $800 billion in spending cuts, same thing for boehner. but the difference comes with the once again, the tax threshold. president obama originally said he would be willing to go with the $400,000 tax threshold. and as boehner said going off obama's words, he was willing to do it at $1 million. it comes down to what that threshold is. >> karen finney, i want to ask you about the same question, this ten days business. but i also want to amendment that question or expand it. how much damage did the

republicans do last night by blowing up plan "b"? in other words, does that take them out of the power position in the negotiations? >> absolutely. because i think at this point, it's pretty clear that any kind of -- boehner could not get, what? 117 votes. so it's clear whatever happens next, he's not going to be able to rely on his own caucus to make that happen. that means, who do you need? nancy pelosi and you're going to have to get democrats to get something through the house. and so, i certainly think republicans hurt themselves in their leverage and look at the polling, 51% of americans have a favorable view of democrats, 31% of americans have a favorable view of republicans, and i can't imagine after watching what happened last night that those numbers for republicans have gotten better. i imagine they've gotten worse. i think the last thing i'll say here is for speaker boehner, he is in a very weakened position in terms of, you know, trying to bargain because he couldn't -- the plan "b" was a terrible, terrible deal from the democrats' perspective. had lots of sweeteners that the

republicans wanted in terms of cuts. and he couldn't get the votes for it. >> well, for a lot of reason. dan greenhaus, you know what happens? if the fiscal cliff goes to january, the middle class tax cuts won't be extended, right? they end. but if you're a republican in the house, you'll be voting for a tax reduction. in other words, the first they expire on december 31st. i want to make this point, it's a simple point, but it sounds complicated. they expire. then january 1st or whenever. republicans can vote for a tax cut to put them back in the place. that could be redempive. that could be the spiritual redemption. >> the first of two is we were talking, roughly speaking about $1 trillion, $1.2 trillion in tax increasesment on january 1st, we're going to be talking about a $3.8 trillion tax reduction. the biggest, i think, listen, i don't think the republicans

acquitted themselves as terrible as some were making out yesterday. but what they did do that was quite poor. if you're president obama from a legacy standpoint, you got a big boost right now. what i mean by that is on january 1st, the bush tax cuts are no more. >> right. >> going forward for the rest of our lives, we're going to be talking about the largest tax cut in history as the obama tax cuts. >> katie, maybe so, but i think the republicans have to be the retreat. in some sense, they'll take sola solace. i happen to think boehner had the least bad proposal, i'm sorry it got beaten down. will the republicans come back and vote for tax cuts in january? democrats sure will. >> well, that's certainly an option that's on the table and definitely makes their job easier with their constituents back home. but there's one thing we're forgetting here, republicans in general can still come back in the ten-day period we have before the fiscal cliff deadline

and vote present and wash their hands clean of president obama's proposal and allow him to deal with the economic consequences of his plan. >> can i just add -- i'm sorry to jump in -- i'm sorry to adjust quick. can we stop saying it's ten days? it's three days. >> it is three days, that's correct. >> they're not coming back until wednesday. >> true. >> i think to katie's point. the thing i would say, though, i don't think that -- again, poll after poll after poll shows it's the republicans who will take the hit if this deal goes down the way we think it's going to go. not the democrats. you know, most americans, what do they understand about the republicans came back and they voted present. that's not what people are going to pay attention to. >> it'll damage -- it'll damage the president. >> they get a paycheck and see what's happened to the payroll taxes. >> i'll tell you something, you've got a point, karen. but it will also -- a recession will do enormous damage to the president's second term. >> but i think -- that's going to hurt -- that's going to hurt everybody. to some degree that hurts everybody. >> and history will not for better or worse remember that mr. boehner was the speaker,

they'll remember mr. obama suffered yet a second recession. see, i think that's the bluff that's going to be called before this is all said and done. i just wish the republicans would call that bluff even more and maybe get those thresholds back higher for the middle class. that's my biggest worry. >> well, that too. and with the voting present, they avert the fiscal cliff by allowing the taxes to go up on the top 2%, president obama gets his $250,000 tax increase threshold, and then the middle class gets the same rate extension. we're not cutting anything here, by the way, we're getting a rate extension. and so republicans can vote present, the middle class still gets their same rate, president obama gets what he wanted with the tax hike on the rich, and they can say, look, we gave him what he wanted. this is his now. >> you can't take $500 billion out of this year's economy without any serious consequences. i mean, it'll be about $500 billion. you can't, that's going to hurt. that could threaten the recession. >> there's no doubt if we go over the cliff and it stays

there's a recession in the first six, possibly nine months, there's no doubt about it. >> they've got to make a deal. they've got to. >> i think what they're leaning -- part of the reason the president said what he said is that i think there is hope that they might do a patch, essentially. >> all right. >> so sort of -- and sort of lay out some parameters for -- >> a verbal agreement. a verbal? >> clearly a big -- a big deal is not happening. >> i've got to get out of here. >> we've been patching for two years. >> ever since ronald reagan came into office. anyway, dan greenhaus, thank you very much, karen, katie, please don't go anywhere, we've got more work for you to do. question, can the republicans recover from any of this? what will their message be? and speaking of that, we're a few minutes away from unveiling human events conservative of the year. famous conservative newspaper human events. free market capitalism is the best path to prosperity. i just wish we had a little more in washington, d.c. right now. recognize me.

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all right. so next question is can republicans recover from this whole fiscal battle? let's bring in our free-market

friday panel. if i were a republican leader, i would want to get out from under it as fast as i can. now, let me ask you this, if that is achievable, let's say within the next month or so, what's the gop going to do next? i do think karen is right, and you know the polling numbers are running against the gop. >> as always. >> what's their message, katie? what's their message now? >> well, i think that john boehner tried to send the message earlier this week when he said that this is now president obama and harry reid's decision to make. and he also said that last night after his plan "b" failed. and so their message is going to be obviously be this is president obama's job and responsibility to come up with something, they tried, obviously couldn't get it through. but in the end, you know, republicans from the beginning of this, they've already -- they've passed two bills earlier this year averting the fiscal cliff before we got to the, you know, three day out period of going over the fiscal cliff. and they've been really bad at marketing that and saying, look,

we put forward solutions, the democrats, especially in the senate have done nothing with them. and so i'm not really sure they can recover if we go over the fiscal cliff. like i said in the first segment, i think the best thing for them is to vote present, wash their hands clean and let the democrats live with the consequenc consequences. >> the democrats will have to live with the consequences and republicans, i think, are going to start moving toward tax reform, entitlement reform, and spending cuts. and every time i hear a leading democrat, they don't want any entitlement reforms, don't want to touch medicare, don't want to touch social security, don't want to cut spending. how is your party going to get out from under that label that they're still the party of big government. >> well, a couple things. first of all, remember that in the aftermath of this election, the president's message has resinated with the american people and the ability of republicans in congress, a more fundamental problem the republicans have in that the party, half of -- most of -- the fight is within the republican party, which makes it very hard for them to get out a message.

my point being, as democrats, you almost just have to stand back and let the chaos speak for itself on the republican side. i think that what you'll see from democrats is, you know, you'll continue to hear the language that, you know, everybody's open to having a conversation, a balanced approach and all of that, but again, at the end of the day, i think part of the challenge that the republicans continue to have is there's not one message. not a unified message. and this debacle that we've just saw, you know, last night doesn't do much to instill much confidence that boehner himself can actually drive a message. and the truth is, some of the senates -- republicans on the senate side didn't want the deal that the house members were trying to push. >> making too much of this myself, but katie, what's wrong with this message? tax reform for growth, entitlement reform so you can preserve the social safety net, and keep the country from going bankrupt. spending, you know, let's get the deficit down, in other words, the gop has opportunities. it is the same old democratic party, katie, i don't see why the gop can't come back with the

pro growth fiscally responsible message. >> i hate to break it to you, but republicans have been doing that for two years now. paul ryan has been beating the drum of entitlement reform for a long time. he's been demonized, and they've been running ads of him throwing grandma off the cliff. >> when's ryan making his comeback? when does marco rubio make his comeback? when do all of these fine governors make their comeback? i mean the republicans have a pretty deep bench. >> part of the calculation that i think conservatives and republicans are missing is that in this conversation, when we talk about a balanced approach, most -- a majority of middle class people, which is why 76% of americans are for taxing the rich, most americans have seen their defined benefits go down, their pensions decrease. so from their perspective and their wages have been stagnant at the same time -- hold on.

>> whose fault is that? >> people are saying, wait, i've already given, what do you mean you want to cut more from my benefits so that the wealthy -- >> i've got to get out. >> they're not cutting benefits. but, larry, it's important to point out here that boehner's plan was actually nancy pelosi approved $1 million tax hold threshold. so that is actually true and president obama agreed to the same thing. >> the cuts boehner put in were not approved by democrats, the tax hikes were. >> nancy pelosi, she likes wealth. anyway, it's just about time to reveal now the name of human events magazine conservative of the year. the exclusive announcement is going to come. right here and next up on the "kudlow report."

conservatives may be under attack in washington, but many of them are winning huge battles in the individual states. one of them who did that this year is the human events conservative of the year. human events, great conservative magazine. we have the human events senior white house correspondent. hello, john. i wrote up paul ryan last year. i got paul ryan's last year. who's your man this year? >> well, he's someone who has stood firm for conservative principle, has been vilified for it, and he emerged triumphantly and in the process never had a harsh word about any of his enemies while the whole world was watching. i refer to wisconsin's governor

scott walker, the fighter with a heart. >> all right. and amazing thing. i know him quite well and had him on the show. and he had a bigger number winning. his margin was bigger when he ran for the recall than he did when he first ran, which i thought was incredible with all the union and fiscal reforms he had that were so controversial. >> exactly. and many people, larry, who wound up voting for barack obama and helped the obama/biden ticket carry the badger state even with the native son on their republican ticket, nonetheless voted for scott walker in that recall election. because they liked what he was doing. very simply, it's making some state employees pay a little bit more for their pension and health care packages, not as much as in the private sector, but a little more, and that way turned a $3.6 million deficit into a $500,000 reserve.

reserve being the surplus and the rainy day fund for wisconsin. >> and hold back collective bargaining and made co-pays for pensions and co-pays for health care and stopped the free lunch that was going on in wisconsin. you know, john, i think you're looking at presidential timber. i really think scott walker has to be in that conversation. i know it's very early, but i think he has to be in that conversation. >> well, my friend scott becker who is a republican political consultant in madison said when i was through with the interview with governor walker whisper the word iowa to him. and i did exactly that. he said it's a beautiful state, he lived there once and admires the governor terry branstad. and i said does that mean you're not running for president? he said, i didn't say that, but look, i spent a lot of money and time trying to win the governorship of wisconsin and then hold it, so i've got a job i like right now. >> great stuff. from the great conservative

magazine "human events," which i write for quite frequently. thank you, john. >> merry christmas. continuing gun control battle. cnn host piers morgan has gone after gun rights advocates in the last few days, often with some very nasty language, but he's not apologizing, and piers morgan will come on the show and will be joining us next up. well, if it isn't mr. margin.

mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.

all right. welcome back to the "kudlow report." i am larry kudlow. one week after the devastating school shooting in newtown, connecticut, left 26 people dead, the national rifle association is breaking its silence. the gun rights group is calling on congress to put armed guards at every school. it's a very interesting development. actually, we could bring in -- let's go right to nbc's danielle lee. she's going to join us with the nra details. good evening, danielle. >> reporter: larry, good evening. after a week long talk about gun control and protecting our children, the situation isn't fewer guns, but more of them on camp campus. the nra's leader blamed the media for a culture of violence. and also accused the country of failing to protect our children

by not putting police on every campus with guns. >> the only thing that stops a bad guy with a gun is a good guy with a gun. >> even supporters of the nra called the organization out of touch with america. lawmakers and top educators fired back. they say any solution also needs to include gun control and mental health care. >> i don't believe that the only way to stop violence by guns is to give the other person a gun. >> -- have acknowledged that armed police officers may be a part of the solution, but also add that's going to cost money and wouldn't necessarily prevent another shooting like last week's tragedy in newtown from happening again. either way, this debate is sure to heat up. more than 400,000 americans have already signed online petitions calling for gun control and president obama has promised to seek legislation next year. reporting live in washington, i'm danielle lee, larry, back to

you. >> many thanks. we appreciate the update. now, we had cnn's -- >> i honestly don't understand why you would rather have people be victims of a crime than be able to defend themselves. it's incomprehensible. >> you're unbelievably stupid man, aren't you? >> it seems to me that you're morally obtuse. you seem to prefer being a victim to being able to prevail over the criminal element. and i don't know why you want to be the criminal's friend. >> what a ridiculous argument. you have absolutely no coherent argument whatsoever. you don't actually -- you don't give a damn, do you about the gun murder rate in america. you don't actually care. >> all right. that was cnn's piers morgan. he was teeing off in a heated debate on gun control. and morgan has gone on the attack against gun rights advocates and he is not apologizing. yesterday, i spoke with piers morgan, host of piers morgan tonight, and i began by asking him how far he would go with gun control.

>> my view of what happened at sandy hook, it was so despicable, so appalling, it was so just transcending, i think, for this debate that something has to give. what i think has to give in the immediate aftermath of this, it has to be returned to the assault weapon ban -- >> right. >> that was in action until 2004. i would amend it and continue it, no the to cover all semiautomatic rifles because some of them are relatively docile weapons by comparison to what i'm talking about. i'm talking about these ar-15s, which with the high-capacity magazines and we saw them at aurora, the movie theater, the oregon shopping mall, and now we saw them in an elementary school. they're capable of firing if you have a magazine of 30, 30 bullets in a few seconds or even 100 in less than a minute. and, you know, this, make no bones about this, larry. the guy that went up to that school, adam lanza, he had

enough bullets, enough magazines to eliminate the entire school. >> why do we need that? this is a question i have. i mean, i would get rid of the semiautomatic or narrow it down to extremely, extremely narrow stuff. but, again, why do we need these huge magazines? why do we need 100 bullets that sort of thing? why do hunters need that? >> why would a hunter need to have 100 magazine? what do they want to do? take a deer and destroy it completely? is that the sport? is that the fun? i thought hunting was about having one shot, if you're hunting for animals and taking that shot and experiencing your skill as a huntsman. there's no skill in blazing a deer with 100 bullets. there is no sensible reason why you need to have these high-capacity magazines other than for criminals who want to obliterate people. >> all right. let me look at that for a second. interesting article by christina hoff summers. i think she was at harvard one

time, she asked this question, piers. i want to get your response. she says, why killers like columbine and newtown shooters do what they do is as mysterious as the problem with evil in general. she said there are hard questions that hasn't been answered. why now? that's what she asks. why us? americans have always had easy access to guns, piers, but until fairly recently, no one thought to go to a school to slaughter first graders. why is it we seem to have created a society where those evil people feel empowered to act? what's going on? >> i think it's -- i think it's an accumulation of things. i think the fact that you can buy these very high-powered assault weapons now as easy as you can buy a packet of crisps in a supermarket and find it startling that america bands me from buying six packets of sudafed, but i can buy a weapon and load it with magazines to kill 100 people in a minute. i find that staggering. that is what has escalated.

the power and high-capacity magazines. now, that's why i say you have to focus a debate on removing those. then you have to tackle other things, mental health is a huge problem in america. i've heard that maybe 3 million people suffer from a form of mental illness and yet many states are cutting back on their investment in tackling this. >> did you see the front of "the journal's" website right now is running a story millions of mental health mental illness documents have been lost from the records regarding the states and the federal government operating through gun control and gun purchase. the whole system has broken down. so we don't really know whether they have any history of mental illness or not. >> i can make it worse for you, larry, not only do you not know who is mentally ill for america, but nor do you know 40% of the people who own these weapons because the registration system, the background checks don't apply to 40% of them because of these loopholes, the gun trades and so on. this is lunacy. what you're basically saying to people is, we don't need to know your mental health.

we don't need to know who's got the guns, and by the way, we're going to supply these in supermarkets. what do people think is going to happen? you're not going to eliminate all mass shootings if you do this. if you take these weapons off the streets, and you really go at it and you bring in background checks for 100% for gun trades and you refuse to allow civilians to use these high-capacity magazines, no one can tell me it's not going to make it more difficult. >> well, they brought it back in australia too. it seems to have -- >> listen, we had this in great britain, larry, 16 children, age 5 years old, killed by a maniac. what did britain do? and it wasn't a political issue. everybody left and right came together and said enough, all handguns in britain were banned. all of them. >> let me ask you two other shorties, i know you have to run too. look, there's a big story out how the video games have contributed to this. >> yep. >> it turns out -- and these are

from investigations, okay. aurora and -- outside of denver, the movie theater, arizona, virginia tech, columbine, other places. these crazy people were addicts to video games, violent video games -- >> and i think that is -- >> combat uniforms -- this has got to be playing a role. >> it has to. and i talked to my 12-year-old son today, i have three sons, he's the youngest. i said to him about these games. he plays them with his friends and he says he's noticed some people get obsessed with them, play them too much, and his words, they become aggressive. and these are friends of his. imagine if you're already mentally vulnerable and unstable and addicted to these games which are representing a war zone, loading up with huge assault weapons, killing loads of people, you become de-sensitized. you cannot eliminate that mental health and the guns. put it together, you have the kind of lethal cocktail at sandy hook. >> last one. you may or may not agree with

me. i think, this is my personal opinion, there's not enough faith in these schools, particularly in these elementary schools. there's no more prayer in the schools. when i was a kid, piers, right around the corner from this studio, the elizabeth marrow school, from kindergarten right up through the sixth grade. every morning, no matter what religion you were, every morning you put your head down on the desk and you said the lord's prayer, which was regarded as nondenominational. now, today you can't do that. my question to you is without faith in the classroom and they're impressionable kids, they don't know the difference between right and wrong in many cases. whether that would have stopped this crazy guy in newtown, i don't know, but it seems to me faith in schools, particularly for these young kids should be restored in some way. >> well, i'm a catholic and i was raised in a pretty strong faith environment with my family. and i certainly had this at my school. and i don't disagree with you. i think it's all sorts of things, larry. it's the lack of parental

guidance, as well. i think it's the breakdown of the social fabric of the family in america and many other countries. but the particular problem for america, which no other country that has the video -- britain has mental health issues, britain has the same videos, the same hollywood movies, britain has all the social problems that america has albeit on a smaller scale. the one thing we don't have is guns. there are no assault weapons allowed for civilians. and guess what? we don't get mass shootings ever. >> you're not against handguns or rifles. >> no, absolutely not. and i fully respect the second amendment and the right to bear arms and defend yourselves. if a father or mother in a house wants to have a handgun or a pistol to defend themselves against an intruder, that is fine by me. i respect your second amendment, but nobody can tell me you need these assault weapons with 100 bullets in a magazine. >> piers morgan, you are great to do this. i appreciate it very, very much. and i look forward to coming back over to your place.

>> larry, i can't wait. nice to talk to you. >> that's what piers morgan had to say. it's not the last word, but i've got to tell you, a lot of things he said, i happen to agree with. i don't know if that makes me conservative, liberal, whatever. nonetheless, i hope it's common sense. our free market friday panel is back in place ready to debate the best way to keep america safe. we bring in congresswoman nan hayworth. we're going to take a break first and we'll be back to critique mr. piers morgan. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more.

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right after mississippi. you mean alabama. say louisiana or there's no dessert. this invitation is brought to you by bp and all of us who call the gulf home. pass new gun laws or set up more armed protections at our schools and public places? that seems to be one of the big debates in america this evening. let's bring back our panel, and we welcome nan hayworth. let's start with the nra they want armed guards in the schools. what's your take? >> well, larry, this is -- we are still reeling from a hideous event. so there are going to be a lot of ideas that from every segment of our society that people are going to have. i think your point is very well taken about the value of faith.

whatever someone's faith may be, and family-based faith, as well. because if we can as a culture be mindful that there are -- there are people and there are interests and there's a society outside our own heads. i think the video games play into that because people have become young people and these are young men who do these. they're deeply disturbed, but there is a cultural milieu that contributes, i think, to that sense that somehow they feel they can go out and be destructive, by whatever means. and as we know -- >> katie, a cultural milieu, an interesting way to put that. you're going to put armed guards in the schools, they're in every place else, airports, every place. maybe we too far that had. but there's also cultural issues. kids don't know the difference between right and wrong, watching these insane video games and then, of course, we have the mentally ill. what's your take on this? because i think something's going to change, katie. i don't know if it's the right

thing, but something's going to change. >> i think we have a violent cultural problem, but it's very important to point out that there's two separate cultures here. the violent video game culture with guns and also the 60 million gun owners every day who are very responsible and respectful towards their firearms. and in terms of arming police officers and having them in schools, you know, offered that today, he's getting crucified by the media and by the left for offering that. he suggested it after the virginia tech shooting, and president clinton actually put lots of cops in schools during his time in office through the cops in schools program. especially after columbine, he allocated even more money for that. this is an idea that not only helps prevent mass shootings, but also goes to the point criminals will always be in existence. there are always going to be criminals in society. they've always been there and always will be. >> karen finney, i don't know what's wrong with puts cops in schools. i'm going to go further. i know i'm a conservative, but i'm deeply troubled by these

automatic weapons and deeply troubled by these 100-bullet magazines people carry around. and at the very least, what i'm suggesting, karen, is the background checks and the documentation has to be vastly greater than it is. vastly larger, and that includes the mental illness part, we're going to do it in the next segment. there are millions of documents that never entered the process for determining who is mentally ill. >> here's part of the problem. ask this is part of the reason that i think he's received so much criticism. his comments were so out of touch. remember, it was the nra that opposed president clinton putting more cops on the street. talked about this mental health care data base, and yet it's the nra has led the effort to ensure we do not actually have the kind of back end systems. for instance, police officers in aurora, colorado, had no way of knowing an individual in their community was amassing that kind of weaponry and that kind of -- >> i thought it was a state issue. >> hold on --

>> i thought it was a state issue. >> no, it's actually -- >> it's not true. >> there's not a state issue, there's a federal issue at heart, as well. and so -- i would suggest to you that part of this is we need to rethink this and not so much about -- i support second amendment rights, but i think we have to be realestic about what is human behavior and how we take into account human behaviors. simply having an officer with a gun at a school is not going to stop a mass shooting. most of the time what ends up happening is an innocent bystander gets shot or killed and the last thing i will say is we should not have the guns that our soldiers are using in afghanistan on our streets. >> well -- >> karen, if they're out of touch, then you're out of touch because a gallup poll showed just this week that 53% of people wanted armed police officers in the schools. an assault weapons -- >> and a majority of nra members, katie, nra members are fine with background checks. what is wrong with saying let's just make sure we know who's

buying guns. >> give me your final thought on this. you may wind up voting or may not. where do you think we ought to go first priority? >> well, i'm glad the president has set up a commission to bring everybody's thoughts together about this. because it's clear from debate we just heard -- >> cabinet officers, not national -- his cabinet officers. >> he should expand the circle to include representatives of all the groups that have been affected most profoundly by this. everybody's affected by it. but there are concentric circles within a society that we have to think about. you've talked about the individual and about the family and about the community and it is -- the society -- all of these play a role, and our society is unique in that way. and our liberties are unique. so we really do rely on those circles, the community, the family, and the individual. >> i'm for the right -- i'm for the right to bear arms, but i think we're going to have to put

some additional restrictions on that regarding these guns. we've done it in the past. the country is still standing, i think it's going to happen in the future. anyway, thanks very much. we appreciate it. >> thanks, larry. now the newtown shootings, the horrible newtown shootings have a lot of people on both sides of the political aisle agreeing that our mental health care system is a mess. won't obama care make it even worse? we're going to debate that. the role of psychiatrists and institutions and whether there's going to be enough of them to help us out. t. on your prepaid card?

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it could be that the weak mental health care system is a big reason for some of these mass shootings in america. let's talk to the thinkprogress.org editor, and author of "decoding the obama health law: what you need to know," betsy mccoy, welcome back. >> thank you. >> first of all, you've got these mass murderers, so many of them have tremendous mental illnesses. where are the psychiatrists? and where are the institutions that should be housing them? >> well, unfortunately, i looked at the last nine mass killings, and unfortunately, those -- many of those killers had been identified by psychiatrists as being dangerous. but there's no tort reform. so these psychiatrists were reluctant to call an emergency room, call a school, call an employer and say don't let that guy out. >> tort reform -- >> because they might be sued. >> that's right.

because they might be sued. in addition, this obama health law is going to make it worse because it downgrades medical care. dumbs it down. somebody that would've seen a psychiatrist with 12 years training will now see a social worker, a physician's assistant, a nurse who can provide cookbook care, but not the expertise to identify the unusual case of the killer about to snap. >> igor, is obama care biased against specialists, in particular, mental -- >> it's not, larry. you know, the american psychiatric association wrote a letter to congressional leaders yesterday about this very issue. and they actually praise obama care for expanding mental health for making sure that more people have access to mental health. so they endorse the law in 2009 along with the american medical association. so what doctors are saying is let's not stigmatize mental health. and in terms of the incentive and doctors have an incentive to provide health care, obama care bumps up the reimbursement of

psychiatric care by 5%. and so another reason why doctors are saying let's bring more people into the system to make sure that people who need care have it. >> neither of those situations represents most doctors. >> the american psychiatric association -- >> secondly, this law puts all nine of the -- all ten of the killers from the last nine shootings would have been put into medicaid under this program which is the lowest -- just a moment, don't interrupt me. the lowest grade -- >> virginia tech situation -- >> the lowest grade -- >> i look at the murders too. you're just wrong. >> hang on, igor. >> the statistics show that a surgery patient on medicaid is 50% more likely to die than one with private insurance, 13% more likely to die than one that has no insurance at all. >> go ahead, igor. >> you ask professionals, they tell you the problem is state budget cuts, federal budget cuts and mental health care services. we need to beef up those services in obama care across

the state so that people have care. and so things -- >> how is that going to happen? >> obama care gives everybody a band-aid and denies everybody -- >> it's going to make sure there's mental health -- it's going to make sure there's mental health par parity across the spectrum. >> all bad, all downgraded, less access to special care. >> you're saying the medicare -- the medicaid population gets worse treatment of mental illness, is that what you're saying? >> absolutely. and under this program, 17 million more people, medicaid patients, 15 minutes every 90 days for medication. >> why are doctors supporting it? why are the american psychiatric association -- >> because they don't represent the doctors. >> they do. they just don't represent you. >> all right. we'll revisit this. that's it for this evening's show. thanks for watching, everybody, i'm larry kudlow. have a merry, merry christmas, everybody. [ male announcer ] at scottrade,

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